Executive Summary
Hard Landing is a vivid and detailed version of the actions that plagued the airline industry to those who lived through it. This book brings to life the services and actions that brought about the start of the airline industry: spartan service, polarized pricing, addictive frequent flier programs. This book is a story based on the schemes, goals, successes, and failures of the early years of the airline industry. Not just the successes and failures of the industry but also the masterminds behind the operation over the course of the past couple of decades.
This book shows how unprofessional and tacky some of the airlines were at attracting customers. Certain airlines would do anything from insinuating customers to fly with free liquor to selecting stewardesses on their appearance and sex appeal.
Like any story there are good guys and bad guys. Hard Landing exploits all these figureheads from all the airlines. You have those who are frowned upon for clear and obvious reasons. Ones like Frank Lorenzo who was the king of bankruptcy throughout the story of this book. Then you have guys like Herb Kelleher, the founder of Southwest Airlines who maintained a positive business ethic and kept Southwest Airlines a positive and strong driving force in the industry. These are just a select few individuals over the course of this book.
This book exposes the inner workings of the airline industry at the time and how deregulation allowed airlines to bully and brawl against each other like street gangs. Hard Landing tells the story of the successes of some and the downfall of others. Above all this book is a story of ethics and how the choices certain individuals made led to their successes or failures.
The Ten Things Managers Need to Know from Hard Landing
1. Do not push your authority to the limit and beyond. Respect the people that work under you. If you are too demanding of yourself or others, it could come back and hurt you in the end. It is nice to push yourselves and motivate those you have authority over. Do not take it for granted though. It might work for you, but history shows it is not a promising future if you continue along its path.
2. Do not let greed become a factor in running a successful business. Greed is something that will to the downfall of anyone who chooses to acknowledge it. Not only is it a selfish act but it is unethical as well. Your business will crumble eventually and all the people around you that helped bring it together and help run it.
3. You may not be the most successful in your line of work but that doesn’t mean you are not a success. Success is not just based on how profitable you are, but also on how much you are valued by those who work for you. Many companies are or have been beyond successful in the past. However many of these companies have failed due to a lack of respect from employers to top management. They may have been at the top of their game for a minute, but at the end they fail. They fail because people refuse after a period of time to work or respect something that refuses to respect them back.
4. Do not underestimate the power of technology when running a business. In the early 1980’s Donald Burr’s aspiring airline People Express was emerging as a power house. He had more planes coming in on a regular basis giving him the power of an emerging more competitive airline. However due to his inability to acknowledge the power of technology, the reservation system soon became a disaster. A travel agent could not book a client on People Express through a computer reservation system because Burr was refusing to pay transaction fees.
5. Businesses learn from trial and error. The reason businesses operate the way they do is from past experiences. In the book, Air Florida pilots refuses to acknowledge that melting snow on the wings of the plane would harm the operation of the plane. Refusing to acknowledge resulted in a horrible crash and all but five deaths. Not to mention this would lead to Air Florida’s downfall.
6. Don’t do what everyone else is doing. Sometimes it’s better to come up with your own angle. Don’t be afraid to try something new. Southwest Airlines had a completely different angle with their strategy and had more success than any of the airlines. Don’t always look to your competitors for what to do, but also what not to do.
7. Do not let bankruptcy be the end. Continental filed for bankruptcy but made a comeback in the future. If you believe you can succeed don’t let anything stop you. Find the strategy it takes and make work.
8. Always have a contingency plan. I know it is difficult to anticipate the unknown, but you need to have some type of plan. When the Persian Gulf War broke out the airlines were crippled. Many reserve pilots went to fly in the war and the airline industry became crippled for a short time.
9. Don’t let your business get ahead of what it is capable of. You need to have your business at where it is comfortable and capable of producing. If it is unbalanced in any way it can result in profit loss, customer loss or obviously both respectively.
10. Don’t just see where your competitors flourish. Also make note of where they make mistakes. Notice the type of people that are in control of an organization. Is that type of person succeeding driving the company? Know your opponents and what does and doesn’t work for them.
Full Summary of Hard Landing
Take-Off
Twenty one year old Charles Lindbergh was a quiet young adult from Minnesota. He studied wind current and worked steadily to maintain his income. He made a New York to Paris flight motivated by a twenty five thousand dollar prize. The success of completing this flight sparked a huge uproar in the press. Lindbergh was named man of the year in 1927.
Lindbergh soon crossed paths with a gentleman named Juan Trippe who was a well known aviation enthusiast. Trippe had happened to see Lindbergh fly his famous New York to Paris flight. Trippe wanted to recruit Lindbergh for his company called Pan American World Airways. This company was a way to deliver mail. Trippe would fly his mail outside the U.S. borders. At the time, he had only the choice of three destinations which were Latin America, Asia or Europe.
Trippe would soon realize that buying and flying its airplanes was much more pricey than expected. So to counteract this problem, Trippe started to offer airplane rides to Havana on the airmail plane for a hundred dollars and allowed the passengers to drink.
Though airmail became rather expensive for the government, airmail started to become increasingly popular. Business people began flying. However, air travel was extremely unsafe at the time. Navigation was poor and pilots predominantly referred to railroad tracks for direction. Motion sickness affected many and some airlines hosed down their cabins before flights.
Network Warriors
A man by the name of C.R. Smith started American Airlines. One of the most powerful men to ever reign in the airline industry was Robert Crandall who would succeed Mr. Smith. He possessed an intimidating appearance and was known as being “ruthless.” Amongst his ruthless personality, he was also known as having a passion for logic and analysis for systems and structure.At the start of the airline industry, airlines worked basically like trains. Planes would have frequent destination stops along the way, loading and unloading passengers. The problem was not being able to fill seats. This is what started the confirmation of itineraries. American Airlines wanted a machine that could tell reservationists when particular flights were sold out and when cancellations had once again made seats available. American Airline’s technical staff undertook the job of creating such an automated system. The name of this automated system would be called “Sabre.” It was brought to life in an office in Westchester County, New York. Almost instantly American Airline’s reservation system became an instant updated list of seats sold and available on each flight. This list included names, phone numbers, special meal request and rental or hotel information.
Striking Back
Deciding where airplanes should fly and at what hours of the day was a complex task. There were all too many factors that went into a scheduling plan. Everything including traffic patterns, economic trends, maintenance timetables, fueling requirements, flight times, loading and unloading intervals, noise rules, slot availability, airport curfews, labor costs, fuel prices, far levels amongst several other factors at every location where the airline conducts business. From this the schedules establishes it everything it needs to develop a flight plan. The flight plan consists of staffing, financing, amount needed for food and beverages and also a backup for potential bad weather.The issue with this is that deregulation is still going on. This means that any of this scheduling can be manipulated by the individual who they worked within. The one person that worked within the boundaries of was the president.
Robert Crandall was elected president of American Airlines in July 1980. By this point, American Airlines was the third ranked airline in the nation.
One of the first things Crandall tried to do was create a new airline outside of American Airlines. This however was a flop so Crandall came up with another idea. If he couldn’t create a new airline on the outside, he would create one inside American Airlines. American Airlines would continue to fly the same routes and airplanes. The only thing is that any new workers they hired would not be treated as fair as the senior workforce. They would suffer lower starting wages and they would receive reduced benefits. In the future as American Airlines grew, this meant they could take on a larger workforce at lower costs. The bigger American grew the more costs it would enjoy like major airlines such as New York Air and People Express.
Stormy Weather
A middle aged man by the name of Ed Acker purchased an interest in the airline for a rather low cost of 1.5 million dollars. He began by recruiting used jets all over North America. He changed Air Florida’s colors from orange to blue and green. Acker began applying Southwest Airlines strategies to his airline. He mainly stuck to low costs fares. Fares were cheaper than the cost of driving. Once deregulation had hit, he applied these traits to his interstate market. When National Airlines was purchased by Pan Am, Acker grabbed National’s old route from Miami to London. Once he did this, he offered first class seating and a free ride from the airport in London in a Roll-Royce limousine.At this point in Acker’s career, he was having the time of his life. He was picking up the piece that other airlines had left behind. The actions of Acker made his airline an overnight success and the second most dominant airline carrier along the East Coast. Acker was suggested by Fortune Magazine as “the ablest of the entrepreneurs catapulted to prominence by airline deregulation.” The Wall Street Journal said the Air Florida had become “one of the great American corporate success stories.”
However Air Florida’s fate was doomed in the near future. Air Florida flight 90 would soon change the course Air Florida’s future. One day in January of 1982 a snowstorm had begun around noon. The captain of Air Florida’s flight was Larry Wheaton. Wheaton was a rookie to taking off and landing over the course of his career. As a pilot you should not use reverse thrust or cruise close to other airplanes when you have snow on your wings. This is because you could melt the snow and the snow could turn into ice. This will in turn cause ice to malfunction the performance of the plane. Ignoring both of these rules, Wheaton taxis to the runway and heads for the sky. As the plane leaves the ground, the plane begins to stall and soon plunges into the icy Potomac River. All but five passengers died.
After the news broke of the disaster, nearly one hundred thousand reservations were canceled. A few months later the chairman of Air Florida suffered a stroke. At this point Air Florida was on a downward spiral. Debt levels were through the roof. In just a matter of weeks, fourteen million in revenue had disappeared from Air Florida. There were no future trading profits or stocks to cushion the blow. Lenders sized the company’s assets. The IRS slapped a tax lien on Air Florida forcing them into bankruptcy.
Continental Divide
As Ed Acker’s career suffered, Frank Lorenzo’s was flourishing. Frank had taken control of Texas International Airlines and it had nearly tripled in size. He created New York Airlines which was doing excellent at the moment. Still flying high and stealing passengers from other airlines. Despite his success, Texas International had only risen from the nineteenth to fifteenth largest airline. Lorenzo was ready to expand. His target was set on Continental Airlines.Lorenzo attempted to buy a chunk of Continental’s stock. On February 6, 1981 he stepped into the market and purchased roughly a million of Continental’s shares. Within days, Lorenzo owned nearly half of Continental’s stock. Employees of Continental frowned as they watched Lorenzo attempt to take over Continental.
To counteract Lorenzo, a group of Continental pilots came up with the idea of using an employee stock ownership plan. This would issue enough new shares to the employees’ group to deteriorate Lorenzo’s position safely to where he wasn’t in control. However, victory came for Lorenzo and Texas International Airlines. The state of California ruled that Continental could not issue millions of new shares to employees without the approval of all existing shareholders. Due to this, Texas Air now controlled half of all existing shares. This put Al Feldman and Continental employees in a corner. Frank Lorenzo was now in power of the country’s seventh largest domestic airline.
Nose Dive
By 1984, People Express airline had transformed the Newark Airport into the eighth largest airport in the country. Donald Burr the head of People Express had created a large airline from practically nothing. In the New York area, People Express had become the number one airline. People Express’s expansion had brought Donald Burr into some moderate competition. Burr’s competition consisted of airlines such as Pan Am and TWA which had suffered in the past and still were in an aspect. At this point, it looked as if Burr had a promising successful future as long as he steered clear of industry giants and kept picking on weaker airlines.However Burr had what one would think to be a logical outlook on the industry. He felt that if he stayed content where he was in a growing industry, he would eventually fail or be surpassed and dominated by other airlines.
Burr began to become obsessed with accumulating planes and eventually was taking one in at the rate of every three weeks or less. With more 747’s in his fleet, Burr went after larger airlines such as United and American Airlines. Burr then stunned the country when he started offering flights at fares that no other airlines could match at the consistency he had been able too.
As People Express Airlines began taking on more business than they ever had before, they encountered a huge problem. People Express Airline’s reservation system was completely and utterly out of date. Basically the only way to make a reservation was by phone. This apparently became a huge problem if your airline is taking on more customers than ever. Statistically it was said that roughly six thousand potential passengers were unable to connect to make a reservation. This was the knife in People Express’s back that would eventually cripple them.
The Southwest Shuffle
In 1986 most passengers had never heard of Southwest Airlines. Southwest had increased its plane inventory to sixty three airplanes. It however remained the fourteenth largest of the thirty airlines in America.The unique thing about Southwest was that it had never lost money since they had been established. Even more interesting about Southwest was that they manage achieve multiple successes following the post deregulation era of the airline industry. Southwest had no computer reservation system, offered no frequent flier program and did not conduct yield management. Many airlines were frustrated and stunned about how Southwest Airlines managed to achieve such success.
Southwest was unlike any airline at the time. It flew point to point instead of through hubs, but also because it built its markets entirely by appealing directly to the public. Southwest did not use travel agents. Whereas other airlines used travel agents, because Southwest did not they saved ten percent of a ticket price commission normally paid to travel agents. Not to mention that the fares on Southwest were so low that commission was next to nothing for a travel agent.
London Calling
In the U.S., Chicago was the busiest airport next to Dallas being the biggest and Denver the newest. In terms of international flight, London’s Heathrow Airport stood alone. Besides Heathrow Airport was the connection that linked the Middle East and North America, Africa with South America, Europe with Asia and every other continent.At the time Iraq had invaded Kuwait which in turn had plunged the airline industry into a depression. The price of oil had skyrocketed. Many reserve pilots that flew for the airline industry were brought back into the military to go fight in the Persian Gulf War.
Due to the invasion of Kuwait, airlines outside the U.S. suffered as well. European airlines suffered due to terrorist threat. The problem was finding a new route for United Airlines. The Pacific was a lost cause. There was a slim chance that Latin America could work. American Airlines was operating the Eastern Routes. The issue with Latin America was that it would not provide Pan Am with the cash it needed to survive for a short period of time. The only option left was London. If the deal was successful, it would give United Airlines access to Europe to Amsterdam, Berlin, Brussels, Hamburg, Helsinki and Munich.
On March 11, 1991 there was a deal. United and American Airlines would be allowed to fly in and out of Heathrow Airport London. In exchange of the deal, the airlines of the United Kingdom would have unlimited code-sharing rights in the United States.
Hard Landing
The story of the airline industry in the United States is one that is unlike any other. There were ups, downs, shady deals, bankruptcy, and suicide amongst other things. The icons of this industry are still around. Some still work for the airline whereas others have pursued different careers. Regardless the story of the airline industry is one we can all learn from. The wrong turns certain airlines made that nearly destroyed them and the successes of others. Take this story and input into your everyday life. It is one we can all learn from personally and professionally.
The Video Lounge
This clip talks briefly about Continental Airlines coming out of bankruptcy. It shows Frank Lorenzo discussing Continentals fate before they began back on the rise. It shows how Continental cut their root system by almost half and how much of the workforce’s salaries were reduced. Airline customers loved Continental’s low cost fares. The video clip shows how Continental’s competitors feared their low cost strategy and attempted to steal the same strategy.
Personal Insights
Why I think:- The author is one of the most brilliant people around because:
- If I were the author I would have done these three things differently:
2. If I were the author I would eliminate talking about every airline and individually focus on one airline. I realize that some airlines have a play in the roles of others, but it would be easier to understand if the author just focused on one particular airline. Most people would probably prefer the original version of the book. I agree it is interesting to hear about the airlines from every angle. I just think the way to go would be to focus on one airline predominantly and occasionally bring up other airlines when necessary.
3. If I were the author I wouldn’t focus too much on Southwest Airlines. Southwest was run pretty well over the course of chaos amongst the other airlines. I would focus more on the airlines that had trouble and not on the ones that had hardly any issues. I understand it is nice to compare how certain airlines succeeded unlike others. Regardless I would stay predominately fixated on the unsuccessful airlines.
- Reading this book made me think differently about the topics in these ways:
- Reading this book made me realize that the airline industry, like any new industry is going to have its disasters. It requires patience, time and ethical people who are willing to work to make it better over the course of time. The airline industry had its ups and downs like every business. Regardless it managed to work itself out despite the chaos and turmoil.
- Reading this book made realize how manipulative some people can be. Frank Lorenzo could manipulate people into believing great things but in the end he had to file for bankruptcy twice. Sometimes everything is not made out to be what it seems. Be aware of what and who you encounter in a business profession.
- I will apply what I have learned in this book to my career by:
2. I will realize the importance of technology. When the Donald Burr of People Express Airlines refused to update their reservation system, this began their quick demise. Burr’s refusal to upgrade crippled the business because they were unable connect with many potential customers.
3. I will apply what I have learned in this book to my career by doing what is respected by everyone in an organization. Doing what is best for you and your business financially is not always ethical. Do what everyone will respect.
- Here is a sampling about what others have said about the book and it’s author:
Bibliography
Walsh, M. (2004). Hard Landing: The Epic Contest for Power and Profits That Plunged the Airlines Into Chaos. BC Books. Retrieved fromhttp://www.blogcritics.org/books/article/hard-landing-the-epic-contest-for/
Newman, R. (1995). Hard Landing-book reviews. Business Library. Retrieved from
http://www.findarticles.com/p/articles
(1995). Hard Landing. Kirkus Reviews. Retrieved from
https://www.kirkusreviews.com/book-reviews/Jr-petzinger/hard-landing/
History of Frank Lorenzo. Aviation Online Magazine. Retrieved from
http://www.avstop.com/history/historyofairlines/franklorenzo.html
Sherman, S. (2011). Capt. Eddie Rickenbacker: Top American Ace of WW1, 26 Victories. Ace Pilots. Retrieved from
http://www.acepilots.com/ww1/us_rickenbacker.html
(1998). Charles Lindbergh Biography. Charles Lindbergh: An American Aviator. Retrieved from
http://www.charleslindbergh.com/history/index.asp
Feldman, A. We Are Family! Retrieved from
http://www.lamkins.tripod.com/Al_Feldman.html
Petzinger Jr., T. (1995). Hard Landing: The Epic Contest for Power and Profits That Plunged the Airlines into Chaos. New York, NY: Random House, Inc.
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Contact Info
To contact the author of this article, “A Management in a Minute Book Overview of Hard Landing by Thomas Petzinger, Jr. for Practicing and Aspiring Managers” please email matthewTurk@selu.edu or Matthew.Turk@yahoo.com.
About the Publisher
David C. Wyld (dwyld.kwu@gmail.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.com/), a hub of research and news in the expanding world of competitive bidding. Dr. Wyld also maintains compilations of his student’s publications regarding:- management concepts (http://toptenmanagement.blogspot.com/)
- book reviews (http://wyld-about-books.blogspot.com/) and
- international foods (http://wyldaboutinternationalfoods.blogspot.com/)
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